Fixed assets are assets which are:
- Not goods for resale in the ordinary course of business.
- In use for an extended period. Typical examples are computers, equipment, vehicles and property.
The expense of a fixed asset is spread out against profits (depreciated) over its useful economic life - rather than making a rather large dent in the profits of the year in which it was bought! Accountants use the term Net Book Value (NBV) of a fixed asset to refer to is its original cost less any depreciation that has accumulated to date.
To enable the Fixed Asset register, navigate to Settings > Configure system > Toggle Features.
Click on the Features tab and tick the checkbox beside Fixed assets.
Create a bill. Purchases> Bills> Create bill
When creating a bill or explaining a bank statement that involves the purchase of a fixed asset, choose one of the Non-Current Asset codes, to record the cost (Non-Current Assets is another way to describe fixed assets).
You can create your own fixed asset accounts on the Settings > Accounting > Account codes menu using the fixed asset Account type.
When the transaction has been added the system will create a pending fixed asset on the fixed asset register.
Navigate to Tools > Fixed Assets and click on the Pending link and click on the edit icon beside the appropriate fixed asset to set up the depreciation details.
If a pending fixed asset has not been created (fixed asset purchased before using Clear Books/fixed asset account not used/Pending fixed asset deleted) click on the Create fixed asset button.
Fill in the details of the form appropriately and hit the Approve button (Confirm new asset button if not from pending) to confirm the new fixed asset.
Note: There are two common forms of depreciation. Straight line depreciation involves spreading the cost of the fixed asset evenly over the estimated useful lifetime of the fixed asset. Reducing balance depreciation involves recognising a higher proportion of the costs of a fixed asset towards the beginning of its economic life.
To begin depreciating an individual fixed asset navigate to Tools > Fixed assets and click on the depreciation icon beside the appropriate fixed asset.
Select the appropriate months to depreciate and click on the Create selected button or click on the Create all button to create depreciation journals for all available months.
The system will then generate a journal(s) which will Dr depreciation account and Cr accumulated depreciation account. These journals can be viewed on the Tools > Journals menu or by clicking on the transaction ID link.
You can also choose to manually depreciate all fixed assets for any available months that need depreciating. To do this navigate to the Tools > Fixed assets menu and click on the Process assets link.
Alternatively, you can enable auto depreciation on the Settings > Configure system > Toggle Features menu which will instruct the system to generate depreciation journals automatically each month as appropriate.
To delete a fixed asset navigate to Tools > Fixed assets and click on the delete icon beside the appropriate fixed asset. Please note this will delete all depreciation journals except those that are included in a locked period.
To record the disposal of a fixed asset navigate to Tools > Fixed assets and click on the archive icon beside the appropriate fixed asset.
You will then need to create a journal to Dr the appropriate accumulated depreciation account with the depreciation on the fixed asset, Cr the relevant fixed asset cost account with the cost of the fixed asset and finally, Debit the difference to a new "Profit/Loss on disposal of fixed assets" account.